RAM has signed a purchase and sale agreement effecting the strategic divestiture of RAM's North Texas Barnett Shale and Boonsville properties to a private E&P company for $43.75 million in cash, subject to customary due diligence and other closing adjustments. The effective date of the divestiture is October 1, 2010 with the closing anticipated in early December 2010. The current transaction represents the first asset sale to be effected pursuant to RAM's announced review of strategic alternatives. Management has previously stated that proceeds from the asset divestitures will be used to reduce outstanding debt balances.
The properties covered by the purchase and sale agreement consist of RAM's interest in its shallow gas, Bend Conglomerate properties and its deeper Barnett Shale properties, all located in the Ft. Worth Basin, principally in Jack and Wise Counties, Texas. Together, proved reserves from these properties accounted for approximately 26.4 billion cubic feet equivalents (Bcfe) of natural gas, natural gas liquids and oil, or an estimated 13%, of RAM's year-end 2009 proved reserves of 204 Bcfe. In addition, the properties represent 10% of RAM's field operating cash flow (defined as revenues less the combination of production expenses and production taxes) during the second quarter ended June 30, 2010. Further, total daily production during the second quarter ended June 30, 2010 for the combined properties was 5,635 thousand cubic feet equivalents (Mcfe) composed of 2,549 Mcf of natural gas, 465 Bbl of natural gas liquids and 50 Bbl of oil. Given the company's outlook for the price of natural gas and its non-operated position in a number of these properties, RAM was not planning to focus a substantial portion of its capital expenditures in the near-to-intermediate term on these assets.
Based on a review of various alternatives presented by interested parties, RAM has determined that deleveraging the company through targeted asset sales and refinancing the company's existing debt will provide the greatest benefit to current shareholders. RAM will also be evaluating refinancing alternatives with respect to its remaining outstanding debt while asset sales are being completed. At September 30, 2010 the company had bank debt outstanding of $246.7 million, composed principally of a balance outstanding under its revolver of $133.5 million and a balance outstanding under a term loan of $113.2 million.
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